In the same boat? The dynamics of embedded firms in peripheral regions

Abstract

Peripheral regions are often negatively characterized as having structural weaknesses that hinder the development of thriving firms. This study explores embeddedness, a concept considered important to overcome such liabilities, because it may enable or constrain actors’ access to additional resources. However, there is limited understanding of the underlying dynamics of this concept. Based on a qualitative case study of the development of salmon-farming firms in peripheral areas of Norway, this study shows that the industry’s pioneering phase was characterized by embedding processes among the farmers through sharing and openness. Over time, greater industry consolidation created a division between listed firms and locally owned small- and medium-sized firms (SMEs). The listed firms disembedded from the social and institutional contexts of the periphery, which led the SMEs to reinforce their embeddedness and continue their collaborations. Thus, our findings extend prior studies treating embeddedness as a static concept, showing how embeddedness consistently develops in response to actors’ actions. We further show that the SMEs’ embeddedness in multiple contexts (social, institutional, and spatial) enabled them to solve mutual challenges through interfirm collaborations, thereby securing competitive advantages. Hence, we contribute to a holistic, evolutionary, and dynamic understanding of embeddedness processes in peripheral regions.